Building on the previous core courses, this course shows you how to maximize shareholder wealth within a legal and ethical framework. Topics covered include capital budgeting, cost of capital, capital structure, payout policy and the fundamentals of derivative pricing.
Learning Outcomes of Corporate Finance
- Understanding why we assume that maximizing firm value is the goal of the firm, and what the ramifications are for non-shareholders and society at large.
- Recognizing that maximizing firm value requires that other stakeholders be made better off as well.
- Recognizing the agency problem in the context of a U.S. Corporation.
- Understanding the relation between leverage and firm value. Use this knowledge to choose a firm's optimal capital structure.
- Understanding how and why leverage creates a tax shield.
- Computing the value of a tax shield.
- Computing the weighted average cost of capital, both with and without a tax shield.
- Applying the NPV investment rule. Fully understand what NPV measures and why it is superior to other investment criterion.
- Understanding the alternative investment rules and their shortfalls.
- Knowing when to return money to stakeholders and why.
- Understanding the choice between dividends and stock buybacks and how this choice can impact firm value.
- Having a basic understanding of how to value a target in an M&A deal.
- Applying the NPV investment rule to M&A deals from the perspectives of both the acquirer and target firms.
- Understanding the board of director's role in an M&A setting.
- Understanding the difference between a hostile takeover and a friendly takeover.
- A working knowledge of the more common hostile takeover strategies and hostile takeover defenses.
- A general understanding of corporate restructuring transactions, which include leveraged buyouts, leveraged restructurings, and corporate divestitures.
- A general understanding of corporate bankruptcy and the Chapter 7 and Chapter 11 bankruptcy processes.